ORLANDO -- The financial services industry should "flourish under this administration," Beltway pundit Andrew Friedman said this morning.
Friedman, who founded the influential website The Washington Update, provided an update on the political climate for the LIMRA 2017 Retirement Conference audience.
Lower tax rates, reduced regulation, higher interest rates and more investment are some reasons to be hopeful, Friedman said. The controversial Department of Labor fiduciary rule earned special mention.
The rule is likely to be delayed again beyond the June 9 applicability date, he said. There's just not enough time to complete the work required, he explained. At some point, the DOL might excise the harsher aspects of the regulation, Friedman added.
Still, most firms are too far down the road to compliance to ever return to the old ways of doing business. That was an opinion shared by a DOL panel that took the stage following Friedman.
"The delay came very late in the game," said Jamie Ohl, president of retirement plan services at Lincoln Financial Group. "We're 80 yards down the field."
Many carriers already have adopted concepts driven by the rule, she said, including level-fee compensation, fee-based products and annuity innovations.
The best outcome for consumers is for a world in which they have the right to choose fee- or commission-based services, the panel agreed.
"If you're a buy-and-hold customer, and you have a 30-year hold period, just charge me the upfront commission and get on with it," said Doug French, managing principal with Ernst & Young. "Not everybody wants to operate in that environment."
Agents and advisors will have to deal with three types of clients in the future, French added. Those types are clients who take a hands-off approach, clients who want standby assistance, and clients who want to work arm-in-arm with an advisor.
Don't confuse the decline in variable annuity sales with just the DOL rule, French said. Some of the VA sales decline is market driven.
"We predict VA sales will be permanently down," he said.
Overall product development will not be devoid of creativity, French added.
"You are going to see simplification of some products, but you are going to see exotic things as well."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org.
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